ByBit Fintech Ltd v Ho Kai Xin and others [2023] SGHC 199
Significant decision: The General Division of the High Court of Singapore (per curiam Philip Jeyaretnam J) has held that crypto assets are things or choses in action, and thus capable of being subject to a trust.
The holder of a crypto asset has in principle an incorporeal right of property recognisable by the common law as a thing in action and so enforceable in court: [36].
Interestingly, the court relied on the following:
a. the Monetary Authority of Singapore (MAS)‘s recent “Response to Public Consultation on Proposed Regulatory Measures for Digital Payment Token Services” (3 July 2023) proposing amendments which suggest that it is possible in practice to identify and segregate digital assets, and hence support the view that it should be legally possible to hold them on trust;
b. O 22 r 1(1) of the 2021 Rules of Court, which defines “movable property” to include “cryptocurrency or other digital currency”;
c. the fact that crypto assets involves the combination of a Private Key with a Public Key to unlock the previous cryptographic lock and in turn locks the unspent transaction output of the crypto asset to the holder’s public Address on the blockchain;
d. National Provincial Bank v Ainsworth [1965] 1 AC 1175 at 1248;
e. W.S. Holdsworth, “The History of the Treatment of ‘Choses’ in Action by the Common Law” (1920) 33(8) Harvard Law Review 997.
Although in this case, the virtual assets in question are USDT / Tether, the Court noted that the contractual right of redemption of USDT under its terms of service is not necessary to the conclusion that USDT is itself a thing of action: [38].
In this case, the Court granted summary judgment to the claimant against the 1st defendant, a former employee who wrongfully transferred USDT to addresses controlled by herself.
The Court ordered that an institutional constructive trust arose over the stolen crypto assets.
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https://www.elitigation.sg/gd/s/2023_SGHC_199